Senator Elizabeth Warren of Massachusetts has introduced a bill that seeks to allow those with pre-2010 student loans to refinance them at interest rates that are about half what they have now, going from in excess of 7% to 3.86%, the rate set by Congress several years ago for federal student loans.
Many economists, bankers, and others are now saying the average student loan....over $25K each, totaling $1.2 TRILLION dollars....is hampering economic growth. And everyone agrees (or at least pays lip service) that an educated workforce is vital to our national health, now and even more so in the future.
Sen. Warren's bill died in the Senate when it failed to secure enough votes to stop a threatened Republican filibuster. The sugar in the gas tank? It was to be paid for with a higher tax on those making over $1M per year.
Meanwhile Bloomberg Business News reported this: *stay with me here*
Using a tax shelter known as the "Double Irish" the most profitable tech company in America (the world?), Apple, is paying only a 2% tax rate on one of it's shadow companies that declares 60% of Apple's total profits.
This subsidiary buys (on paper) all iPhones made in China, immediately sells them to another Apple subsidiary based in (low-tax) Singapore, then books the difference as Apples' profit. Ireland's already-low 12.5% tax rate is massaged by their tax lawyers and eventually becomes a miniscule 2% rate (thanks to Irish tax loopholes, hence the "Double Irish"). This saves them BILLIONS of dollars in US taxes.
I don't blame Apple for doing this. I blame an international system that ALLOWS it to happen. Take this, multiply it by all the other international companies who are using smoke and mirrors to dodge their taxes, too, and you can imagine how much money we're leaving on the table.
I know, I know....Businesses don't PAY taxes, they COLLECT taxes. But as it is, consumers are paying the tax (in the price of their iPhone), but instead of it going to the treasury, it's going back to Apple's shareholders.
The liberal position: Business is greedy. The conservative position: Taxes are too high. Neither side can see past their own short term talking points.
My pragmatic position: If we put an end to all these tax dodge shell games and just had a realistic modest corporate tax rate that could actually be collected, we would have the money to subsidize worthwhile things like reduced student loan rates.
This would likely lead to a better educated, more competitive workforce, and some of those brainiacs just might be the ones to invent Apple's next iGizmo, making Apple and its shareholders even MORE money.
We used to call this "priming the pump". Sometimes you've gotta spend a little more up front to make a lot more later on. Win / win!
I know my example is overly simplistic, but the concept is sound. Why can't anyone look a bit farther into the future and see it?
S
